U.S. stocks fall from record level as manufacturing index slips

U.S. stocks fell, pulling the Standard & Poor’s 500 Index lower after a record high, as a report showed American manufacturing expanded less than forecast in March as factories slowed production and orders waned.

Joy Global Inc., U.S. Steel Corp. and Freeport-McMoRan Copper & Gold Inc. tumbled more than 2.5 percent as industrial and raw-material shares had the biggest declines among 10 S&P 500 groups. Hess Corp. gained 3.2 percent after MFP Investors LLC’s Michael Price said the company could be a takeover target. Tesla Motors Inc. surged 15 percent after announcing it turned its first quarterly profit.

The S&P 500 fell 0.7 percent to 1,558.78 as of 3:18 p.m. in New York. The Dow Jones Industrial Average dropped 38.35 points, or 0.3 percent, to 14,540.19. The Russell 2000 Index tumbled 1.6 percent to 936.08. Trading among S&P 500 shares was 22 percent below the 30-day average at this time of day. U.S. markets were closed March 29 for Good Friday. Markets in most of Europe were shut today.

“The market is fairly sensitive at this level and that means we need continuing improvement in the economy to keep moving stocks forward,” Randall Warren, who oversees about $80 million including options as chief investment officer of Warren Financial Service in Exton, Pennsylvania, said yesterday in a phone interview. “We need good economic reports and we’re going to need good earnings reports later this month.”

The S&P 500 rose 0.4 percent on March 28 to reach its highest closing level. It remains below the all-time intraday high of 1,576.09. The gauge rallied 10 percent in the first quarter, extending a recovery that has added more than $10 trillion of value to the world’s largest stock market. The Dow first passed its 2007 record on March 5.

Manufacturing Data

The Institute for Supply Management’s factory index fell to 51.3 in March from 54.2 a month earlier, the Tempe, Arizona- based group said today. The median forecast of economists surveyed by Bloomberg was 54. A reading of 50 is the dividing line between growth and contraction.

A separate report showed construction spending in the U.S. rose in February, paced by the highest level of home building in more than four years. Data on March 29 showed consumer spending climbed in February by the most in five months and confidence unexpectedly improved in March, showing job-market gains are helping Americans overcome tax increases and concern about federal budget cuts.

Among global economic reports today, the Bank of Japan’s Tankan index showed pessimism among large manufacturers and data on South Korean exports and China factory output trailed forecasts.